I couldn’t help but be amused by the news in the business section this week that the FTC was going to approve the merger of two giant airlines, American Airlines and US Air, to form a single behemoth one. And while I’m sure there are many in corner offices at those two companies celebrating, and more than a few competitors quaking in their boots, I’m not sure either reaction isn’t a bit premature.
And you need look no further than U.S. manufacturing to understand why.
Look, I know it’s not entirely analogous, but as a manufacturer one thing I’ve seen with my own eyes these past ten to fifteen years is the need to be lean, the need to be able to read subtle changes in the marketplace, and the need to be able to, no pun intended, shift on the fly.
That’s part of the reason why manufacturing continues to experience such a remarkable renaissance in this country, and a big reason why virtually all our lumbering giant airlines are still struggling to find their footing. Sometimes an entity can get too big for its own good, and whatever benefits it might derive from incredibly deep pockets and wildly diverse resources is probably going to be more than offset by an inability to respond quickly to a marketplace which, more and more, is expecting (and even demanding) some combination of quality and speed.
How do you think maverick carrier Southwest grew as quickly as it did? Yes, there were other issues and other factors working to its benefit. But Southwest’s model was that of a small, hungry startup willing to put an absolute premium on what it determined to be the three essential drivers of any successful carrier: service, safety and efficiency. Some might argue price was also a consideration. But I’ll argue Southwest’s low prices were simply a by-product of its desire and ability to focus so heavily on those three mantras, particularly the third of the three.
What’s more, Southwest instilled in its employees a whole us vs. them vibe, and those workers bought in in a big way. Whereas employees at the other airlines, many of them union members, continue to operate out of an almost adversarial relationship with their employer, at Southwest the majority of its workers perform duties like they were the ones in charge. I mean it. At Southwest, various points-of-contact personnel treat customers like they’re the ones calling the shots and they’re the ones signing the checks, as opposed to being merely un-empowered cogs in some giant machine.
Part of the change we’re beginning to see in the airline industry is one we’ve seen occur in manufacturing, especially over the past ten years. We’re seeing more and more airlines getting away from the old, wildly inefficient hub system, and adopting a direct route system similar to Southwest’s.
And isn’t that exactly what happened in manufacturing? Didn’t we completely re-imagine the global supply chain over the course of the past few years and replace what had amounted to a relatively small number of gigantic, single-location plants and factories with thousands upon thousands of smaller, more nimble and more accessible ones the world over? As a result, we’ve minimized our liability and reduced our overhead, while utterly maximizing our efficiencies, along with our ability to respond to the marketplace and retool accordingly.
I won’t beat this one into the ground, nor will I try to over-simplify it. But if the carriers in the airline industry understood even half of what the manufacturers in that industry knew, they wouldn’t be fearing the marriage of American and US Air this week. My sense is they’d be chomping at the bit.
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